motia developers
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A
SUMMER TRAINING REPORT
ON
VARIOUS SOURCES OF FINANCE FOR
MOTIA DEVELOPERS PVT. LTD.
CONDUCTED BY
In partial fulfillment of the degree of Bachelor of Business
Administration
(Session: 2008-2011)
Under the guidance of:Mr. Pawan Joshi (Finance Manager)Motia Developers Pvt. Ltd
SUBMITTED TO
Maharishi Markandesdhwar Institution of
Management Mullana (Ambala) (M.M.I.M)
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SUBMITTED BY:
Ankush Sharma
Roll No. 1208006BBA-5th Sem.Session: 2008-2011
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PREFACE
Theoretical knowledge without the practical exposure is of little
value. Theoretical study in classroom is not sufficient to understand
the functioning and nature of research. Therefore, it becomes
necessary to undergo project.
On the job training in business organization infuses among
student senses of critical analysis of the real managerial situations to
they are exposed. This gives them an opportunity to apply their
conceptual, theoretical and imaginative skills to real life situations and
evaluate the results thereof.
The concept of summer training, which is there in curriculum of
Business Management Schools, serves two important purposes.
Firstly, it gives the student the fair amount of insight of the problem
faced by them. Secondly, this type of projects helps business
management students to get a first hand experience of the actual
working conditions, which otherwise is possible only when students
the job. Joining any organization without practical experience would
be just like getting a driving license without actually a vehicle.
I undertook my training at Motia Developers Pvt. Ltd. During
my training, I gained a good experience and in-depth knowledge
about the working Construction companies and how to deal with
different situations.
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This report is account of what I learnt and experienced during
my training and I have tried to complete this report with as much
perfection as possible.
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CERTIFICATE
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DECLARATION
This is to certify that I Ankush Sharma the student of
MAHARISHI MARKANDESHWAR UNIVERSITY
studying in BBA (5th Sem.). Roll no.1208006 has undergone
summer/industrial training in Motia Developers, Zirakpur for six
weeks and have submitted a project/industrial report on the title
"Various Sources of finance forMOTIA DELOPERS PVT.LTD.as assigned by the Company, for partial fulfillment of Degree
of Bachelor of Business Administration (B.B.A.) to
MAHARISHI MARKANDESHWAR UNIVERSITY.
I solemnly declared that the work done by me is original and no copy
of it has been submitted to any other Universities for award of any
other degree/diploma/fellowship or on similar title and topic.
Signature of Student
(Ankush Sharma)
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ACKNOWLEDGEMENT
Gratitude is not a thing of expression; it is more a matter of
feeling.
There is always a sense of gratitude which one express for
others for their help and supervision in achieving the goals. I too
express my deep gratitude to each and every one who has been helpful
to me in completing the project report successfully.
First, of all, I am highly thankful to _____________________,
(M.M.I.M) for allowing me to pursue my Summer Training Report
on Various sources of finance for the companies.
I give my regards and sincere thanks to Mr. Pawan Joshi
(Finance Manager) who has devoted his precious time in guiding me
and helping me it with in time.
I am indebted to the Company employees who supported me in
handling my queries. I feel self-short of words to thanks my parents
and friends who had directly or indirectly instrumental in the
completion of the project.
(Ankush Sharma)
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CONTENTS
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Page No.
2-3
4
5
6
9-10
11-12
13-22
23-38
39-40
41-57
58
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Preface
Certificate
Acknowledgement
Declaration
Introduction
To Company Profile
Literature Review
RESEARCH METHODOLOGY
Research Design
BUSINESS PROFILE
Competitors of Motia Developers Pvt. Ltd.
Comparison Price of Apartments
Balance Sheet
COMPANY PROFILE
SWOT Analysis
PROFILE OF THE STUDY
OBJECTIVE OF THE STUDY
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Analysis & interpretation
Limitation Of the study
Recommendations
Suggestions
Annexure
Bibliography
Questionnaire
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59-69
70
71-72
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INTRODUCTION
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INTRODUCTION
Real estate
A piece of land, including the air above it and the ground
below it, and any buildings or structures on it.
Or
Real estate
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land, including buildings or improvements on it and its
natural assets, as water
the profession or work of an agent in the purchase and
sale of real estate
the buying and selling of real estate for investment or
speculation
LiteratureReview
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RESEARCH
METHODOLOGY
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Research is any organized inquiry carried out to provide
information for solving problems. Business research is a
systematic inquiry that provides information to take business
decisions.
Definition
Research comprises of defining and redefining
hypothesis or suggesting solution, collecting,
organizing and evaluating data making deductions
and reaching conclusions.
By Clifford Woody
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The term Research Methodology here comprises of all
research activities carried on in connection with the Various
Sources Of finance For Motia Developers Pvt. Ltd..
The basis purpose of Research Methodology is to describe
the research procedure. It helps the researchers to the way to
move on for carrying the study.
Process of Research design
Formulation of research problem
Extensive literature survey
Research Design
Collection of data
Analysis of Data
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Interpretation
Recommendation
PROBLEM STATEMENT
The first step in research is formulating a research problem. A
poorly defined problem will not yield any useful result. It is rightlysaid that a problem well defined if half solved.
In order to identify the research problem three categories of
symptomatic situation namely overt difficulties, latent difficulties and
unnoticed opportunities should be studied.
1. Overt difficultiesare those, which are quite apparent, and
which manifest themselves for example if a firm has been
witnessing a decline in sale for same time this could be called
on overt difficulty.
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2. Latent difficultieson the other hand are those, which are not
so apparent and I which if not checked, would soon become
evident for ex. Decline sales may in due course demoralize the
sale staff.
3. Unnoticed Opportunities indicate the potential for growth in a
certain area of marketing. Such opportunities are not clearly
seen and some effort is required to explore them.
As such no problem was given to me while doing my summer training
project but I found the following problems in the organization.
Complicated terms and Conditions
The terms and conditions of every product were so much
complicated that it is not easily understandable by the
customers.
Strict Rules and High Targets
Rules and regulation for the employee of the organization were
so much tight some time they feel very hectic. Moreover the
targets given to them are also very high.
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These definitions differ in detail, but together they give the
essentials of research design. First, the design is a plan for selecting
the sources and types of information used to answer the researchquestion. Second, it is a framework for specifying the relationship
amount the various variables. Third, it is a blueprint that outlines each
procedure from the hypothesis to the analysis of data.
The design provides answers for such questions as these:
Why the study is being made?
What techniques will be used together data?
What kind of sampling will be used?
How will time & cost constraints be dealt with?
How the data can be analyzed? In my study the organization
was Motia Developers and sample size was around 20 persons.
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SOURCE OF DATA COLLECTION
To make the research complete it is very necessary to have
useful and authentic data. There are two types of data collection
sources.
PRIMARY SOURCE:-
Primary data are those, which are collected afresh & for the first
time & this happen to be original in character. In my project simple
well drafted questionnaire was circulated among all respondents. Full
freedom was provided to an individual to answer the questions.
Company bills, balance sheets and the response of the staff
of the company are the major source of information
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SECONDARY SOURCES:-
These are those which are collected by someone else &
which have been passed through statistical process.
Brouchers, Manual, Journals, Magazines, Site of Motia
Groups Pvt. Ltd. and Various Articles lot many inputs for
successful completion of project.
SAMPLING DESIGN
The various sampling plans used in the study were as follows:
Random Sampling
In this sampling technique each and every unit of universe has the
same chance of being included in the sample and every unit is
selected randomly out of population.
Judgment Sampling
In this investigator selects only those items, which represents the
characteristics of the problem under study. The judgment of the
investigator plays an important role in the type of sampling.
Convenience Sampling
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In this the investigator chooses the items according to his own
convenience. The sample size depends upon the convenience of the
investigator but the chances of inaccuracy and biasness are more.
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ExploratoryResearch
design
DescriptiveResearch
Design
ExperimentalResearchDesign
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Business Profile
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Motia Developers Two Projects
Motia Heights
Motia is a name Synonymous with quality, reliability and service in
the field of real estate. Years of dedication and perseverance has led to
develop discrete strategies and improvise solutions that suit thechallenges of the market. The Company always chooses the best
locations. Prime Location with close proximity to the city is an
important aspect for every project at Motia Group.
As Motia developers, we are accomplished in the line, having
successfully executed several residential projects. Also developing
more than 3.5 Acers of Land. The group is executing a major project
in Baddi and the prime most location has already been acquired. The
project in its full construction mode is set to create a landmark in
Himachal Pradeshs Industry hub Baddi.
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Ensconced admits sprawling lush green surroundings, the latest from
Motia Group is Motia Heights , one of the prime opportunities in thispart of the Country . An amalgamation of lifestyle and luxury is the
Hallmark of these dwellings. One gets all modern day amenities with
in a Kilometer radius at Motia Heights. Discover your long
cherished desire to call a space 'your own.' Motia Heights has homes
that are elegantly fashioned and exquisitely designed. They are a
harmonious blend of convenience, comfort and royal splendor along
with all contemporary facilities. What's more, world-class amenities
including shopping complex and schools make it a deal. You find
nature at its best, in its captivating beauty with lush green parks all
around. With an extensive area of about 50,000 square feet, the scenic
park for kids inside the Estate ensures that their childhood is spent in
the lap of nature at leisure.
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Amenities
Freehold Land Approved by Punjab Government
Earthquake Resistant RCC Framed Structure
Optimum Utilization of Available Covered Space
Vaastu-friendly Layout and Design
Strategic location with Splendid Surroundings
Beautiful Landscaped Exterior
Walled Complex with 24 Hours Security
Modern Elevators with Gen-Set Back-Up
24 Hours Water Supply
Provision For Cable Connection
EPBAX And Broadband Facilities
Club with Indoor & Outdoor Games, Discotheque and
Health Club Facilities
Shopping Arcade in front of Complex
Well-Planned Individual Car Parking
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School Site within the Complex
Swimming Pool within the Complex
Price without Escalation Clause
MOTIA PLAZA
(Thinking differently about the future)
The new found love nest of Indian industry Baddi. A small,
industrial town of 45 kms from Chandigarh - has attracted over 75 per
cent of the Rs 10,000 crore invested in Himachal Pradesh in the last
two years. Wipro, Godrej, and Cadbury already here, 300 others,including big names like TVS, Hero Honda, to follow soon. And the
construction of the Chandigarh- Baddi road via Siswan will give
another boost to the industry. The road will reduce the distance
between the two cities by almost 26 km.It is here where you will find
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Motia Plaza, the Complex is the most strategic investment of a
lifetime for any one willing to enjoy the closeness of India's leading
Industrial Township and picturesque of lower Himalayas.
ORGANISATION CHART
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Motia Developers Profile
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ChairmanChairman
DirectorsDirectors
FinanceManagerFinanceManager
MarketingManager
MarketingManager
PurchaseManager
PurchaseManager
ChiefEngineerChief
Engineer
Accounts &financeAssistan
t
Accounts &
financeAssistan
t
Store Incharge
Store Incharge
StoreAssistan
t
StoreAssistan
t
Marketing
Assistant
Marketing
Assistant
Purchase
Assistant
Purchase
Assistant
CivilEngineer
CivilEngineer
Supervisor
Supervisor
Supervisor
Supervisor
Supervisor
Supervisor
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Chairman - Mr. Pawan Bansal
Directors - Mr. Kewal Bansal,
Mr. Labh chand
Mittal,
Mr. Ramesh Mittal,
Mr. Gunjan Mittal
Finance manager - Mr. Pawan Joshi
Chief Engineer - Mr. Mukesh
Marketing - Mr. Kewal Krishan
Rattan
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Location Plan of Motia Developers
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Location Plan of Motia
Developers
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Projects by Motia Developers Pvt. Ltd.
are listed in the table below.
Project Name Location Status
Motia Plaza Baddi Completed
Shakti Vatika Samana Completed
Shiv Shakti Vatika Barnala Township Completed
Motia Royal Estate Zirakpur Completed
Motia Heights Zirakpur Completed
Highway Apartments Kalka Ongoing
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Competitors of Motia Developers
Pvt. Ltd.
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Comparison Price of Apartments
Particulars 3BR (1621 Sqft). 3BR (1381
Sqft)
Apartments Rs.42,14,551/- Rs.35,90,551/-
Power backup Rs.1,00,000/- Rs.1,00,000/-
Car parking Rs.1, 00,000/- Rs.1, 00,000/-
Particulars 2BR(1237Sqft) 3BR (1524Sqft)
Apartments 22, 05,000/- 27, 43,200/-
Particulars 3BR (1800Sqft).
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Apartments 48, 00,000/-
Particulars 3BR (1647 Sqft)
Apartments
Floor Ground Floor Rs. 3788000/-
1st Floor Rs. 3721000/-
2nd Floor Rs. 3673000/-
3rd Floor Rs. 3629000/-
4th Floor Rs. 3581000/-
5th Floor Rs. 3513000/-
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P& L A/c of the year ending 2008-2009
MOTIA DEVELOPERS Pvt.
Ltd. P&L A/c
Particulars 1-Apr-2008 to 31-Mar-2009 Particulars 1-Apr-2008 to 31-Mar-2009
Purchase
Account
45,715,575.00 Gross loss c/o
62,152,172.00BricksPurchase A/c
2,117,278.00
cementPurchase A/c
6,455,575.00
electronic itempurchase A/c
3,507,854.00
elevatorpurchase a/c
5,520,500.00
kitchenpurchase a/c
343,800.00
Marble pur.a/c
4,853,630.00
Misc.item pur.
a/c
3,859,027.00Sanj/bajri pur.
a/c1,973,212.00
Sanitary itemspur. a/c
3,179,474.00
S.R agencies8,537.00
SteelPurchase a/c
10,590,616.00
woodpurchase a/c
3,323,146.00
Direct Expenses16,436,597.00
Freight &cartage exp. A/c
5,845.00
Misc. Buildingexp.
240,057.00
Wages & laborA/c
16,190,695.00
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62,152,172.00 62,152,172.00
Gross loss b/f 62,152,172.00 Indirectincomes 37,557.35Interest
received A/c37,557.35
Indirectexpenses
9,202,042.00
Adv. Expensesa/c
1,171,856.00 Net loss
71,316,656.65
bank chargesa/c
230,841.00
comm. &brokerage a/c
1,575,640.00
com.Maintancecharges a/c
15,300.00
consultancyfees a/c
108,500.00
depreciation584,532.00
electric exp. a/c439,528.00
E.S.I.C A/c17,181.00
Fbt a/c85,320.00
Generatorrunning exp.
276,002.00
income tax A/c12,212.00
insurance a/c48,303.00
interest paida/c
3,551,667.00
misc. ofice exp.56,378.00
newspaper &peroidicals A/c
1,244.00
postage &courier exp.
6,231.00
printing &
statinary a/c
16,525.00provident fund
a/c28,185.00
salary a/c589,550.00
salespromotion
7,440.00
taxes & feesa/c
20,900.00
telephone exp.
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203,734.00vech. Running
exp.154,484.00
welfare a/c489.00
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Particulars As on 31-3-2009 As on 31-3-2008
SOURCES OF FUNDS
Share Capital 53,900,000.00 60,750,000.00
Reserves & surplus 109,172.24 88,145.98
54,009,172.24 60,838,145.98
LOANS FUNDS
Secured Loans 31,163,053.50 22,689,591.00
Unsecured Loans 21,931,535.00 16,931,803.00
53,094,588.50 39,621,394.00
Deferred Tax Liability
Total 107,103,760.74 100,459,539.98
APPLICATION OF FUNDS
Fixed Assets
Gross Block 6,513,276.00 4,966,989.00
Less; Dep 1,864,374.00 902,039.00
Net Block 4,648,902.00 4,064,950.00
CURRENTASSETS,LOANS&ADVANCES
inventories 281,485,766.39 164,785,825.89
Sundry debtors
Cash & Bank balances 9,249,335.87 10,800,478.09
Loans & advances 1,471,925.48 1,336,456.00
292,207,027.74 176,922,759.98
Less: Current Liabilities & provision
Liabilities 189,242,423.00 80,079,444.00
Provisions 509,746.00 448,726.00
189,752,169.00 80,528,170.00
Net Current Assets 102,454,858.74 96,394,589.98
Misc. Expenditure107,103,760.74 100,459,539.98
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Particulars As on 31-3-2009 As on 31-3-2008
SOURCES OF FUNDS
Share Capital 53,900,000.00 60,750,000.00
Reserves & surplus 109,172.24 88,145.98
54,009,172.24 60,838,145.98
LOANS FUNDS
Secured Loans 31,163,053.50 22,689,591.00
Unsecured Loans 21,931,535.00 16,931,803.00
53,094,588.50 39,621,394.00
Deferred Tax Liability
Total 107,103,760.74 100,459,539.98
APPLICATION OF FUNDS
Fixed Assets
Gross Block 6,513,276.00 4,966,989.00
Less; Dep 1,864,374.00 902,039.00
Net Block 4,648,902.00 4,064,950.00
CURRENTASSETS,LOANS&ADVANCES
inventories 281,485,766.39 164,785,825.89
Sundry debtors
Cash & Bank balances 9,249,335.87 10,800,478.09
Loans & advances 1,471,925.48 1,336,456.00
292,207,027.74 176,922,759.98
Less: Current Liabilities & provision
Liabilities 189,242,423.00 80,079,444.00
Provisions 509,746.00 448,726.00
189,752,169.00 80,528,170.00
Net Current Assets 102,454,858.74 96,394,589.98
Misc. Expenditure107,103,760.74 100,459,539.98
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COMPANY
PROFILE
SWOT
S - StrengthW - Weakness
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O - OpportunityT - Threats
PROFILE OF THE STUDY
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Strengths:-
Good Financial Sources
Good Projection
Situated On main Road
Finance options to customers
Market reputation of the company
Good market relations with the
Companys. directors
Weakness:-
Delay in Projection
Lack of highly Qualified Staff
No control Of architecture on project
Opportunities:-
High Market share
High market growth
Availability of land
Threats:-
No. of options available for the
customers
Others flats are selling at lower cost
No Unified System
Price leadership
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Various Sources ofFinance Available
For the Company
One can learn more about a road by traveling it,
Than by consulting all the maps in the world.
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In my SUMMER TRAINING REPORT, I made a research on
Various sources of funds available for the organization I mustforewarn the readers that this project is no a work of excellence by a
scholar. It is a student attempt to watch, record, analyze and
understand the business activities and practical aspects of business by
applying his theoretical knowledge and concepts. Even then I dare to
say that I made the best possible attempt to accomplish this work.
This final chapter starts by looking at the various forms of "shares" as
a means to raise new capital and retained earnings as another source.
However, whilst these may be "traditional" ways of raising funds,
they are by no means the only ones. There are many more sources
available to companies who do not wish to become "public" by means
of share issues. These alternatives include bank borrowing,
government assistance, venture capital and franchising. All have theirown advantages and disadvantages and degrees of risk attached.
Sources of funds
A company might raise new funds from the following sources:
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The capital markets:
New share issues, for example, by companies acquiring a stock market listing for
the first time
Rights issues
Loan stock
Retained earnings
Bank borrowing
Government sources
Venture capital
Franchising.
Ordinary (equity) shares
Ordinary shares are issued to the owners of a company. They have a
nominal or 'face' value, typically of $1 or 50 cents. The market value
of a quoted company's shares bears no relationship to their nominal
value, except that when ordinary shares are issued for cash, the issue
price must be equal to or be more than the nominal value of the
shares.
Deferred ordinary shares
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Are a form of ordinary shares, which are entitled to a dividend only
after a certain date or if profits rise above a certain amount. Voting
rights might also differ from those attached to other ordinary shares.
Ordinary shareholders put funds into their company:
a) By paying for a new issue of shares
b) through retained profits.
Simply retaining profits, instead of paying them out in the form of
dividends, offers an important, simple low-cost source of finance,
although this method may not provide enough funds, for example, if
the firm is seeking to grow.
A new issue of shares might be made in a variety of different
circumstances:
a) The company might want to raise more cash. If it issues ordinary
shares for cash.
b) The company might want to issue shares partly to raise cash, but
more importantly to float' its shares on a stick exchange.
c) The company might issue new shares to the shareholders of another
company, in order to take it over.
New shares issues
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A company seeking to obtain additional equity funds may be:
a) An unquoted company wishing to obtain a Stock Exchange
quotation
b) A company which is already listed on the Stock Exchange wishing
to issue additional new shares.
The methods by which an unquoted company can obtain a quotation
on the stock market are:
An offer for sale
A prospectus issue
A placing
An introduction.
Rights issues
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A rights issue provides a way of raising new share capital by means of
an offer to existing shareholders, inviting them to subscribe cash for
new shares in proportion to their existing holdings.
For example, a rights issue on a one-for-four basis at 280c per share
would mean that a company is inviting its existing shareholders to
subscribe for one new share for every four shares they hold, at a price
of 280c per new share.A company making a rights issue must set a
price which is low enough to secure the acceptance of shareholders,
who are being asked to provide extra funds, but not too low, so as to
avoid excessive dilution of the earnings per share.
Loan stock
Loan stock is long-term debt capital raised by a company for which
interest is paid, usually half yearly and at a fixed rate. Holders of loan
stock are therefore long-term creditors of the company.
Loan stock has a nominal value, which is the debt owed by the
company, and interest is paid at a stated "coupon yield" on this
amount. For example, if a company issues 10% loan stock the coupon
yield will be 10% of the nominal value of the stock, so that $100 of
stock will receive $10 interest each year. The rate quoted is the gross
rate, before tax.
Debentures are a form of loan stock, legally defined as the written
acknowledgement of a debt incurred by a company, normally
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containing provisions about the payment of interest and the eventual
repayment of capital.
Debentures with a floating rate of interest
These are debentures for which the coupon rate of interest can be
changed by the issuer, in accordance with changes in market rates of
interest. They may be attractive to both lenders and borrowers when
interest rates are volatile.
Security
Loan stock and debentures will often besecured. Security may take
the form of eitherafixed chargeor afloating charge.
a)Fixed charge; Security would be related to a specific asset or
group of assets, typically land and buildings. The company would be
unable to dispose of the asset without providing a substitute asset for
security, or without the lender's consent.
b)Floating charge; With a floating charge on certain assets of the
company (for example, stocks and debtors), the lender's security in the
event of a default payment is whatever assets of the appropriate class
the company then owns (provided that another lender does not have aprior charge on the assets). The company would be able, however, to
dispose of its assets as it chose until a default took place. In the event
of a default, the lender would probably appoint a receiver to run the
company rather than lay claim to a particular asset.
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Retained earnings
For any company, the amount of earnings retained within the business
has a direct impact on the amount of dividends. Profit re-invested as
retained earnings is profit that could have been paid as a dividend.
The major reasons for using retained earnings to finance new
investments, rather than to pay higher dividends and then raise new
equity for the new investments, are as follows:
a) The management of many companies believes that retainedearnings are funds which do not cost anything, although this is not
true. However, it is true that the use of retained earnings as a source of
funds does not lead to a payment of cash.
b) The dividend policy of the company is in practice determined by
the directors. From their standpoint, retained earnings are an attractive
source of finance because investment projects can be undertaken
without involving either the shareholders or any outsiders.
c) The use of retained earnings as opposed to new shares or
debentures avoids issue costs.
d) The use of retained earnings avoids the possibility of a change in
control resulting from an issue of new shares.
Another factor that may be of importance is the financial and taxation
position of the company's shareholders. If, for example, because of
taxation considerations, they would rather make a capital profit
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(which will only be taxed when shares are sold) than receive current
income, and then finance through retained earnings would be
preferred to other methods.
A company must restrict its self-financing through retained profits
because shareholders should be paid a reasonable dividend, in line
with realistic expectations, even if the directors would rather keep the
funds for re-investing. At the same time, a company that is looking for
extra funds will not be expected by investors (such as banks) to pay
generous dividends, nor over-generous salaries to owner-directors.
Bank lending
Borrowings from banks are an important source of finance to
companies. Bank lending is still mainly short term, although medium-
term lending is quite common these days.
Short term lending may be in the form of:
a) An overdraft, which a company should keep within a limit set by
the bank. Interest is charged (at a variable rate) on the amount by
which the company is overdrawn from day to day;
b) A short-term loan, for up to three years.
Medium-term loans are loans for a period of from three to ten years.
The rate of interest charged on medium-term bank lending to large
companies will be a set margin, with the size of the margin depending
on the credit standing and riskiness of the borrower. A loan may have
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a fixed rate of interest or a variable interest rate, so that the rate of
interest charged will be adjusted every three, six, nine or twelve
months in line with recent movements in the Base Lending Rate.
Lending to smaller companies will be at a margin above the bank's
base rate and at either a variable or fixed rate of interest. Lending on
overdraft is always at a variable rate. A loan at a variable rate of
interest is sometimes referred to as afloating rate loan. Longer-term
bank loans will sometimes be available, usually for the purchase of
property, where the loan takes the form of a mortgage. When a banker
is asked by a business customer for a loan or overdraft facility, he will
consider several factors, known commonly by the economic.
PARTS
- Purpose
- Amount
- Repayment
- Term
- Security
P The purpose of the loan A loan request will be refused if the purpose
of the loan is not acceptable to the bank.
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A The amount of the loan. The customer must state exactly how much
he wants to borrow. The banker must verify, as far as he is able to
do so, that the amount required to make the proposed investment has
been estimated correctly.
RHow will the loan be repaid? Will the customer be able to obtain
sufficient income to make the necessary repayments?
T What would be the duration of the loan? Traditionally, banks have
offered short-term loans and overdrafts, although medium-term
loans are now quite common.
S Does the loan require security? If so, is the proposed security
adequate?
Leasing
A lease is an agreement between two parties, the "lessor" and the
"lessee". The lessor owns a capital asset, but allows the lessee to use
it. The lessee makes payments under the terms of the lease to the
lessor, for a specified period of time.
Leasing is, therefore, a form of rental. Leased assets have usually been
plant and machinery, cars and commercial vehicles, but might also be
computers and office equipment. There are two basic forms of lease:
"operating leases" and "finance leases".
Operating leases
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Operating leases are rental agreements between the lessor and the
lessee whereby:
a) The lessor supplies the equipment to the lessee
b) The lessor is responsible for servicing and maintaining the leased
equipment
c) The period of the lease is fairly short, less than the economic life of
the asset, so that at the end of the lease agreement, the lessor can
either
i) Lease the equipment to someone else, and obtain a good rent for it,
or
ii) sell the equipment secondhand.
Finance leases
Finance leases are lease agreements between the user of the leased
asset (the lessee) and a provider of finance (the lessor) for most, or all,
of the assets expected useful life.
Other important characteristics of a finance lease:
a) The lessee is responsible for the upkeep, servicing and maintenance
of the asset. The lessor is not involved in this at all.
b) The lease has a primary period, which covers all or most of the
economic life of the asset. At the end of the lease, the lessor would not
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be able to lease the asset to someone else, as the asset would be worn
out. The lessor must, therefore, ensure that the lease payments during
the primary period pay for the full cost of the asset as well asproviding the lessor with a suitable return on his investment.
c) It is usual at the end of the primary lease period to allow the lessee
to continue to lease the asset for an indefinite secondary period, in
return for a very low nominal rent. Alternatively, the lessee might be
allowed to sell the asset on the lessor's behalf (since the lessor is the
owner) and to keep most of the sale proceeds, paying only a small
percentage (perhaps 10%) to the lessor.
Hire purchase
Hire purchase is a form of installment credit. Hire purchase is similar
to leasing, with the exception that ownership of the goods passes to
the hire purchase customer on payment of the final credit installment,
whereas a lessee never becomes the owner of the goods.
Hire purchase agreements usually involve a finance house.
i) The supplier sells the goods to the finance house.
ii) The supplier delivers the goods to the customer who will
eventually purchase them.
iii) The hire purchase arrangement exists between the finance house
and the customer.
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Government assistance
The government provides finance to companies in cash grants and
other forms of direct assistance, as part of its policy of helping to
develop the national economy, especially in high technology
industries and in areas of high unemployment. For example, the
Indigenous Business Development Corporation of Zimbabwe (IBDC)
was set up by the government to assist small indigenous businesses in
that country.
Venture capital
Venture capital is money put into an enterprise which may all be lost
if the enterprise fails. A businessman starting up a new business will
invest venture capital of his own, but he will probably need extra
funding from a source other than his own pocket. However, the term
'venture capital' is more specifically associated with putting money,
usually in return for an equity stake, into a new business, a
management buy-out or a major expansion scheme.
The institution that puts in the money recognizes the gamble inherent
in the funding. There is a serious risk of losing the entire investment,
and it might take a long time before any profits and returns
materialize. But there is also the prospect of very high profits and a
substantial return on the investment. A venture capitalist will require a
high expected rate of return on investments, to compensate for the
high risk.
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d) Details of the management team, with evidence of a wide range of
management skills
e) Details of major shareholders
f) Details of the company's current banking arrangements and any
other sources of finance
g) Any sales literature or publicity material that the company has
issued.
A high percentage of requests for venture capital are rejected on an initial
screening, and only a small percentage of all requests survive both this screening
and further investigation and result in actual investments.
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Franchising
Franchising is a method of expanding business on less capital than
would otherwise be needed. For suitable businesses, it is an alternative
to raising extra capital for growth. Franchisors include Budget Rent-a-
Car, Wimpy, Nando's Chicken and Chicken Inn.
Under a franchising arrangement, a franchisee pays a franchisor for
the right to operate a local business, under the franchisor's trade name.
The franchisor must bear certain costs (possibly for architect's work,establishment costs, legal costs, marketing costs and the cost of other
support services) and will charge the franchisee an initial franchise fee
to cover set-up costs, relying on the subsequent regular payments by
the franchisee for an operating profit. These regular payments will
usually be a percentage of the franchisee's turnover.
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Objectives of the study
I have taken my internship in the real estate sector due to my
personal interest
The main objectives of my internship are:-
To get all the basics knowledge that how to run
business in corporate world.
To get the knowledge about the financial position
of the business. E.g. calculating ratios of the year
2008 & 2009
To get the knowledge about the tax and the
payments of the deals.
To know about the various sources of finance
available for the company
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Findings & Data Analysis
Calculation of ratios for the year 2009
CURRENT RATIO = CURRENT ASSETS
CURRENT LIABILITES
Current Ratio = 292, 207, 027.74189,752,169. 00
Current Ratio = 1.53:1
Interpretations:-
According to accounting principles, the currentratio of 2:1 is supposed to be an ideal ratio. Now here
the current ratio is 1:53:1 which is low then the, this all
indicates that the company has the lack of liquidity and
shortage of working capital. The reason for low current
ratio is that with the increase in our assets our liabilities
are also increasing
QUICK RATIO = Liquid Assets
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Current Liabilities
QUICK RATIO = 10,721,261.35
189,752,169. 00
QUICK RATIO = 0.056:1
Interpretations:-
Here the liquid ratio is 0.056:1 which
is more then the ideal ratio i.e. 1:1. It is not beneficial for the
growth of the organization. It means companies have not the
proper current assets to pay its liabilities. The reason is that
when our current liabilities are increasing on the other hand
our liquid assets are decreasing.
Debt Equity Ratio = Long-term loans
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Shareholders Funds
Debt equity ratio = 53,094,588.50
54,009,172.24
Debt Equity Ratio = 0.98: 1
Interpretations:-
Here the debt equity ratio is .98:1
which is less then the ideal ratio. This tells that long
term financial position of the company is sound. It
provides the sufficient protection to long term lenders.
Total Assets to debt Ratio = Total Assets
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Debt
Total Assets to debt Ratio = 296,855,929.74
53,094,588.50
Total Assets to debt Ratio = 5.59: 1
Interpretations:-
Here the Total Assets to debt Ratio = 5.59: 1.
It all shows that the use of debts is less then the total assets
and shows a lager safety for the lenders.
Propitiatory Ratio = Shareholders Fund
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Total Assets
Propitiatory Ratio = 54,009,172.24
296855929.74
Propitiatory Ratio = .18 or 18.1%
Interpretations:-
Shareholders funds of the company are 18.1% in comparison
to total assets. It all shows the long term financial position of
the company is very good.
Calculation of ratios for the year 2008
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CURRENT RATIO = CURRENT ASSETS
CURRENT LIABILITES
Current Ratio = 176,922,759.9880,528,170.00
Current Ratio = 2.19:1
Interpretations:-
According to accounting principles, the currentratio of 2:1 is supposed to be an ideal ratio. Now here
the current ratio is 2.19:1 which is higher then the, this
all indicates that the company has the good financial
position and they have the ability to pay their current
liabilities.
QUICK RATIO = Liquid Assets
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Current Liabilities
QUICK RATIO = 12,136,934.09
189,752,169. 00
QUICK RATIO = 0.063:1
Interpretations:-
Here the liquid ratio is 0.063:1 which
is more then the ideal ratio i.e. 1:1. It is not beneficial for the
growth of the organization. It means companies have not the
proper current assets to pay its liabilities. The reason is that
when our current liabilities are increasing on the other hand
our liquid assets are decreasing.
Debt Equity Ratio = Long-term loans
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Shareholders Funds
Debt equity ratio = 39,621,394.00
60,838,145.98
Debt Equity Ratio = 0.65: 1
Interpretations:-
Here the debt equity ratio is .65:1
which is much more then the ideal ratio. This tells that
long term financial position of the company is sound.
It provides the sufficient protection to long term
lenders.
Total Assets to debt Ratio = Total Assets
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Debt
Total Assets to debt Ratio = 180,987,709.98
39,621,394.00
Total Assets to debt Ratio = 4.56: 1
Interpretations:-
Here the Total Assets to debt Ratio = 4.56: 1.
It all shows that the use of debts is less then the total assets
and shows a lager safety for the lenders.
Propitiatory Ratio = Shareholders Fund
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Total Assets
Propitiatory Ratio = 60,838,145.98
180,987,709.98
Propitiatory Ratio = .3361 or 33.61%
Interpretations:-
Shareholders funds of the company are 33.61% in
comparison to total assets. It all shows the long term financial
position of the company is very good.
Ratios Comparison
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Year 2009 2008
Current Ratio 1.53 2.19
Quick Ratio0.056 0.063
Debt-equity ratio0.98 0.65
Total Assets to debt
equity Ratio5.59 4.56
Proprietary Ratio 18.1% 33.61%
Limitations of the study
Small sample size: Area covers under report were very small.
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The research was carried out in a shortest spam of last 1 week.As a part of summer training
Some of the respondents are unwilling to give information. E.g.Managers some times not be ready to give their data and viewsabout the company position.
Activity ratios and profitability ratios cant be calculatedbecause the balance sheet contains the WORK IN PROGRESSDATA. So sales of the apartments and the profit cant becalculated.
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Recommendations
Suggestions
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Recommendation refers to the outcome of the research
work done and the suggestions for implementation.
It is suggested that manufacturer should make all efforts to
control cost.
New technology should be applied according to the requirement
of the customer.
Competitors prices of the apartments should also be checked at
different intervals.
Payment should be improved by the Management.
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Annexure
Bibliography
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www.motiaheights.com
www.realestate.com
www.motiagroup.com
Annual reports of Motia Developers Pvt. Ltd.
Brouchers of Motia Developers Pvt. Ltd
News papers
QUESTIONNAIRE
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http://www.motiaheights.com/http://www.realestate.com/http://www.motiagroup.com/http://www.motiaheights.com/http://www.realestate.com/http://www.motiagroup.com/ -
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Name : ____________________________________
Age : ____________________________________
Sex : ____________________________________
Occupation : ____________________________________
1. Please state where you first heard about MOTIA HEIGHTS?
Friends Advertisement
Internet others (fm, T.V)
2. What factor plays an important role while dealing with the company?
Friends Advertisement
Convincing power of executives Special offers
3. Are you satisfied with dealing with the company?
Yes No
Average cant say
4. What about the cost spent by you?
Minimum Over feited
Average Excessive
5. How you rate the general ambience, design& feel of the apartments?
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1 2 3 4 5
Excellent Good Fair Average Disappointed
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6. How was employees behavior during the dealing?
As usual Hostile
Indifferent Friendly
7. Was their any communication gap between you and the co. executive?
Yes No
Partially cant say
8. Have you understand all the guide lines and the policies of the
company?
Yes No
Limited Partially
9. Did you find any difference between service provided & services
delivered?
Yes No
10. Whether there is a time delay in possession?
Yes At some
Occasions
No
11. From how many years are you associated with the company?
1-3 years 3-5 years
5 or more not further
12. Are you looking forward to continue maintained relationship with the
company?
Yes No
Deciding
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13. Would you like to suggest to others about the company?
Yes No
Complaints:-
Suggestions:-